Although the Dec. 11, 2025, executive order (EO) on artificial intelligence took aim at a patchwork of state AI laws making “compliance more challenging, particularly for start-ups,” employers should comply with their respective state AI laws for now.

“All current and pending state and local AI laws will remain enforceable unless and until a court blocks them through an injunction, or Congress passes a federal law that pre-empts them,” said David Dorey, an attorney with Fisher Phillips in Washington, D.C. “The best way to think of the EO is a directive to executive branch officials to kick off a process of federal pressure and litigation against the states, and not a regulatory action in and of itself.”

Event: The AI+HI Project 2026

‘Stay the Course’

“Despite all the uncertainty, there are some practical steps HR professionals can take to best position their organizations for the near future,” said, Dorey who recommended that HR:

• Stay the course on state-law and local-law compliance. Colorado, California, Illinois, and other state requirements, as well as New York City’s, are still on track unless and until legislatures or courts say otherwise.
• Build an internal inventory of AI tools. Focus especially on hiring, promotion, monitoring, scheduling, productivity scoring, sentiment or voice analysis, safety prediction tools, and other similar tools.
• Strengthen AI governance and documentation. Organizations will benefit from data retention plans, bias testing protocols, human-in-the-loop controls, clear vendor documentation, and risk assessments for high-stakes use cases. 
• Update vendor contracts. Ensure companies can pivot if state rules remain in effect, a new federal standard emerges, or vendors want to adjust compliance language. 
• Monitor the next three federal deliverable dates — and Congress. The U.S. Department of Justice AI Litigation Task Force (established within 30 days of the Dec. 11 executive order) whose sole responsibility is to challenge state laws inconsistent with the AI executive order, U.S. Department of Commerce “onerous law” list (identified 90 days after the executive order), and Broadband Equity Access and Deployment (BEAD) policy notice (issued 90 days after the executive order) will be online early this year. States with AI laws deemed onerous by the federal government may lose access to BEAD nondeployment funds.

“As for Congressional action? It’s anyone’s guess at this point,” Dorey said.

Toolkit: Using AI for Employment Purposes

Newly Effective Illinois Law

Illinois’ AI law, which took effect Jan. 1, “takes aim at the discriminatory use of AI in all aspects of employment decision-making,” said Bradford Newman, an attorney with Eversheds Sutherland in Silicon Valley, Calif. 

The state law imposes two key requirements. First, it prohibits employers from using AI in a discriminatory fashion based on protected class or ZIP code for recruitment, hiring, promotion, renewal of employment, selection for training or apprenticeship, discharge, discipline, tenure, or the terms, privileges, or conditions of employment. The law does not require intent; the use of AI that has a discriminatory impact constitutes a violation, Newman explained. 

When AI is used, the law might, for example, apply to video interviews, parsing resumes, evaluating candidates, summarizing interviews, hiring alone, conducting background checks, onboarding, training, evaluating performance, dividing sales, and selecting employees to be terminated, noted Niloy Ray, an attorney with Littler in Minneapolis. 

Secondly, the law obligates companies to provide notification to affected individuals that AI is being used in connection with employment decisions, Newman said. 

The notice should be written, said Michael Schulman, an attorney with Morrison Foerster in Washington, D.C., and New York City. 

“The broad AI definition, notice requirement, and anti-discrimination provision are similar to other employment-related AI laws, such as those in New York City and Colorado,” said Kevin White, an attorney with Hunton in Washington, D.C., and Houston. “Unlike the New York City or Colorado laws, the Illinois law does not have an explicit audit requirement.”

This article is courtesy of Society for Human Resource Management (SHRM)